Exhibit (g)(1)
FACULTATIVE
YEARLY RENEWABLE TERM REINSURANCE AGREEMENT
Effective August 1, 2002
Between
FARMERS NEW WORLD LIFE INSURANCE COMPANY
("Ceding Company")
0000 00xx Xxxxxx XX
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
And
COMPANY A
("Reinsurer")
[ADDRESS]
Reinsurer Agreement No. 0251-3384
Exhibit (g)(1)
FACULTATIVE
YEARLY RENEWABLE TERM REINSURANCE AGREEMENT
This Agreement is between
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(Ceding Company),
0000 00xx Xxxxxx XX, Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
And
COMPANY A (Reinsurer),
[ADDRESS]
The Reinsurer agrees to reinsure certain portions of the Ceding Company's
contract risks as described in the terms and conditions of this Agreement, which
includes any attached Schedules and Exhibits.
This reinsurance Agreement constitutes the entire Agreement between the parties
with respect to the business being reinsured hereunder and there are no
understandings between the parties other than as expressed in this Agreement.
Any change or modification to this Agreement is null and void unless made by
amendment to this Agreement and signed by both parties.
In witness of the above, the Ceding Company and the Reinsurer have by their
respective officers executed and delivered this Agreement in duplicate on the
dates indicated below, with an effective date of August 1, 2002.
FARMERS NEW WORLD LIFE COMPANY A
INSURANCE COMPANY
By: /s/VP Chief Actuary By: /s/Vice President
------------------- -----------------
Title: VP Chief Actuary Title: Vice President
Date: 12/4/03 Date: November 6, 2003
By: /s/ Asst. Vice President and Secretary By: /s/Regional Head of Pricing
-------------------------------------- ---------------------------
Title: Asst. Vice President and Secretary Title: Regional Head of Pricing
Date :12/4/03 Date: November 6, 2003
FACULTATIVE YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
Table of Contents
1. PARTIES TO AGREEMENT .................................................................................. 1
2. REINSURANCE BASIS ..................................................................................... 1
a. RESIDENCE .................................................................................... 1
3. FACULTATIVE REINSURANCE ............................................................................... 1
4. COMMENCEMENT OF REINSURANCE COVERAGE................................................................... 2
5. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM
RATES.................................................................................................. 2
a. LIFE REINSURANCE.............................................................................. 2
b. SUPPLEMENTAL BENEFITS......................................................................... 2
i. WAIVER OF PREMIUM.................................................................... 2
ii. MONTHLY DISABILITY BENEFIT RIDER..................................................... 2
iii. ACCIDENTAL DEATH..................................................................... 2
c. TERM INSURANCE RENEWALS....................................................................... 2
d. TABLE RATED SUBSTANDARD PREMIUMS.............................................................. 3
e. FLAT EXTRA PREMIUMS........................................................................... 3
f. PREMIUM ADJUSTMENTS........................................................................... 3
6. CASH VALUES OR LOANS................................................................................... 3
7. PAYMENT OF REINSURANCE PREMIUMS ....................................................................... 3
a. PREMIUM DUE................................................................................... 3
b. FAILURE TO PAY REINSURANCE PREMIUMS........................................................... 3
c. OVERPAYMENT OF REINSURANCE PREMIUM............................................................ 3
d. UNDERPAYMENT OF REINSURANCE PREMIUM........................................................... 4
e. RETURN OF REINSURANCE PREMIUM................................................................. 4
f. UNEARNED REINSURANCE PREMIUMS................................................................. 4
8. PREMIUM TAX REIMBURSEMENT.............................................................................. 4
9. DAC TAX AGREEMENT...................................................................................... 4
10. REPORTS ............................................................................................... 5
11. RESERVES FOR REINSURANCE............................................................................... 5
12. DEATH AND DISABILITY CLAIMS............................................................................ 5
a. NOTICE OF DEATH............................................................................... 5
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b. PROOFS ....................................................................................... 5
c. CLAIMS PAYABLE................................................................................ 5
d. AMOUNT AND PAYMENT OF CLAIMS.................................................................. 6
e. CONTESTED CLAIMS.............................................................................. 6
f. CLAIM EXPENSES................................................................................ 6
g. EXTRACONTRACTUAL DAMAGES...................................................................... 6
13. POLICY CHANGES......................................................................................... 7
a. NOTICE ....................................................................................... 7
b. INCREASES..................................................................................... 7
c. REDUCTIONS OR TERMINATIONS.................................................................... 7
d. RISK CLASSIFICATION CHANGES................................................................... 7
e. NON-FORFEITURE BENEFITS....................................................................... 8
14. TERM CONVERSIONS, EXCHANGES AND REPLACEMENTS........................................................... 8
a. NOTICE ....................................................................................... 8
15. POLICYHOLDER REINSTATEMENTS............................................................................ 9
A. REINSTATEMENT.......................................................................................... 9
16. INCREASE IN MAXIMUM DOLLAR RETENTION LIMITS AND
RECAPTURE.............................................................................................. 9
a. NEW BUSINESS.................................................................................. 9
b. RECAPTURE..................................................................................... 9
17. ERROR AND OMISSION .................................................................................... 10
18. INSOLVENCY ............................................................................................ 10
19. ARBITRATION ........................................................................................... 11
a. GENERAL ...................................................................................... 11
b. NOTICE ....................................................................................... 11
c. PROCEDURE .................................................................................... 11
20. OFFSET ................................................................................................ 12
21. GOOD FAITH: FINANCIAL SOLVENCY ........................................................................ 12
22. TREATMENT OF CONFIDENTIAL INFORMATION ................................................................. 12
23. TERM OF THIS AGREEMENT AND TERMINATION ................................................................ 13
24. MEDICAL INFORMATION BUREAU ............................................................................ 13
25. SEVERABILITY .......................................................................................... 13
ii
26. SURVIVAL .............................................................................................. 14
27. NON-WAIVER ............................................................................................ 14
iii
Listing of Schedules:
SCHEDULE A - COVERAGE AND LIMITS
1. Plans Reinsured
2. Ceding Company's Maximum Dollar Retention Limits
3. Premium Due
4. Recapture Period
5. Net Amount at Risk
SCHEDULE B - REINSURANCE PREMIUMS
1. Life Reinsurance Premiums
2. Supplemental Benefits Reinsurance Premiums
3. Age Basis
SCHEDULE C - REPORTING INFORMATION
Information on Risks Reinsured
Policy Exhibit Summary
Reserve Credit Summary
Accounting Summary
SCHEDULE D - FACULTATIVE FORMS
Application for Reinsurance
Notification of Reinsurance
iv
FACULTATIVE YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
1. PARTIES TO AGREEMENT.
This Agreement is solely between the Reinsurer and the Ceding Company.
There is no third party beneficiary to this Agreement. Reinsurance
under this Agreement will not create any right or legal relationship
between the Reinsurer and any other person, for example, any insured,
policyholder, agent, beneficiary, assignee, or other reinsurer. The
Ceding Company agrees that it will not make the Reinsurer a party to
any litigation between any such third party and the Ceding Company. The
Ceding Company and the Reinsurer will not disclose the other's name to
these third parties with regard to the agreements or transactions that
are between the Ceding Company and the Reinsurer, unless the Ceding
Company or the Reinsurer gives prior written approval for the use of
its own name.
The terms of this Agreement are binding upon the parties, their
representatives, successors, and assigns. The parties to this Agreement
are bound by ongoing and continuing obligations and liabilities until
this Agreement terminates for new business and the underlying policies
are no longer in force, whichever occurs later. This Agreement shall
not be bifurcated, partially assigned, or partially assumed.
2. REINSURANCE BASIS.
This Agreement, including the attached Schedules, states the terms and
conditions of facultative reinsurance that is on a Yearly Renewable
Term basis. This Agreement is applicable only to reinsurance of
policies directly written by the Ceding Company. Any policies acquired
through merger with another company, reinsurance, or purchase of
another company's policies are not included under the terms of this
Agreement.
a. RESIDENCE.
Each insured must be a resident of the United States or Canada
at the time of issue.
3. FACULTATIVE REINSURANCE.
The following items must be submitted to obtain a facultative quote:
a. A form substantially similar to the Reinsurer's "Application
for Reinsurance" form shown in Schedule D.
b. Copies of the original insurance application, medical
examiner's reports, financial information, and all other
papers and information obtained by the Ceding Company
regarding the insurability of the risk.
c. The initial and ultimate risk amounts requested.
After receipt of the Ceding Company's application, the Reinsurer will
promptly examine the materials and notify the Ceding Company either of
the terms and conditions of the Reinsurer's offer for facultative
reinsurance or that no offer will be made. The Reinsurer's offer
expires 120 days after the offer is made, unless the written offer
specifically states otherwise. If the Ceding Company accepts the
Reinsurer's offer,
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then the Ceding Company will note its acceptance in its underwriting
file and mail, as soon as possible but no later than 90 days, a formal
reinsurance cession to the Reinsurer using a form substantially similar
to the "Notification of Reinsurance" form shown in Schedule D. If the
Ceding Company does not accept the Reinsurer's offer, then the Ceding
Company will notify the Reinsurer in writing, as soon as possible.
4. COMMENCEMENT OF REINSURANCE COVERAGE.
The Reinsurer's reinsurance coverage for any policy that is ceded
facultatively under this Agreement will begin when:
i. The Ceding Company accepts the Reinsurer's offer; and
ii. The policy has been issued.
Reinsurer's reinsurance coverage for any policy that is ceded
facultatively under this Agreement will terminate simultaneously with
the Ceding Company's contractual liability for the policy reinsured,
unless otherwise terminated in accordance with the terms of this
Agreement.
5. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM RATES.
a. LIFE REINSURANCE.
Reinsurance shall be on an excess basis. The amount reinsured
on a policy is the policy's net amount at risk less what the
Ceding Company's chooses to retain on the policy less any
amount of reinsurance with other reinsurers. The Maximum
Dollar Retention is shown in Section 2 of Schedule A. The net
amount at risk is defined in Section 5 of Schedule A. The
reinsurance premiums per $1000 are shown in Section La. of
Schedule B.
b. SUPPLEMENTAL BENEFITS. For the supplemental benefits reinsured
under this Agreement, the following provisions will apply:
i. WAIVER OF PREMIUM.
The reinsurance benefit is the premium waived on a
policy for the amount reinsured with the Reinsurer.
The reinsurance premiums for this benefit are shown
in Section 2 of Schedule B.
ii. MONTHLY DISABILITY BENEFIT RIDER.
The reinsurance benefit is the reinsured portion of
the monthly benefit payable in the event of
disability. The reinsurance premiums for this rider
are shown in Section 2 of Schedule B.
iii. ACCIDENTAL DEATH.
Accidental death benefits may be reinsured with or
without a corresponding amount of life insurance. The
reinsurance premiums for this benefit are shown in
Section 2 of Schedule B.
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c. TERM INSURANCE RENEWALS.
The reinsurance premium rates after the premium guarantee
period are calculated using the original issue age, duration
since issuance of the original policy, and the original
underwriting classification.
d. TABLE RATED SUBSTANDARD PREMIUMS.
If the Ceding Company's policy is issued with a table rated
substandard premium, the reinsurance premiums shown in Section
1.b of Schedule B will apply.
e. FLAT EXTRA PREMIUMS.
If the Ceding Company's policy is issued with a flat extra
premium, the reinsurance premiums shown in Section 1.c of
Schedule B will apply.
f. PREMIUM ADJUSTMENTS.
The reinsurance premium rates are not guaranteed. The
Reinsurer reserves the right to change the rates at any time.
If the Reinsurer changes the rates, it will give the Ceding
Company 90 days' prior written notice of the change. Any
change applies only to reinsurance premiums due after the
expiration of the notice period. The maximum reinsurance
premiums are equal to the statutory valuation premiums for
yearly renewable term insurance at the maximum interest rates
and minimum mortality rates applicable at the policy issue
date.
If at any time the Reinsurer increases the net reinsurance
premiums, and the Ceding Company has not increased the
premiums charged to the policyholders, then the Ceding Company
will have the right to recapture all affected reinsurance
within ninety (90) days.
6. CASH VALUES OR LOANS.
This Agreement does not provide reinsurance for cash surrender values.
In addition, the Reinsurer will not participate in policy loans or
other forms of indebtedness on reinsured business.
7. PAYMENT OF REINSURANCE PREMIUMS.
a. PREMIUM DUE.
The reinsurance premiums for each reinsurance cession are due
as shown in Section 3 of Schedule A.
b. FAILURE TO PAY REINSURANCE PREMIUMS.
If the reinsurance premiums are 60 days past due, for reasons
other than those due to error or omission as defined below in
Article 17, the premiums will be considered in default and the
Reinsurer may terminate the reinsurance upon 30 days' prior
written notice to the Ceding Company. The Reinsurer will have
no further liability as of the termination date. The Ceding
Company will be liable for the prorated reinsurance premiums
to the termination date. The Ceding Company agrees that it
will not force termination under the provisions of this
paragraph to avoid the recapture requirements or to transfer
the block of business reinsured to another reinsurer.
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c. OVERPAYMENT OF REINSURANCE PREMIUM.
If the Ceding Company overpays a reinsurance premium and the
Reinsurer accepts the overpayment, the Reinsurer's acceptance
will not constitute nor create a reinsurance liability nor
result in any additional reinsurance. Instead, the Reinsurer
will be liable to the Ceding Company for a credit in the
amount of the overpayment, without interest.
d. UNDERPAYMENT OF REINSURANCE PREMIUM.
If the Ceding Company fails to make a full premium payment for
a policy or policies reinsured hereunder, due to an error or
omission as defined below in Article 17, the amount of
reinsurance coverage provided by the Reinsurer shall not be
reduced. However, once the underpayment is discovered, the
Ceding Company will be required to pay to the Reinsurer the
difference between the full premium amount and the amount
actually paid, without interest. If payment of the full
premium is not made within 60 days after the discovery of the
underpayment, the underpayment shall be treated as a failure
to pay premiums and subject to the conditions of Article 7.b.,
above.
e. RETURN OF REINSURANCE PREMIUM.
If a misrepresentation or misstatement on an application or a
death of an insured by suicide results in the Ceding Company
returning the policy premiums to the policy owner rather than
paying the policy benefits, the Reinsurer will refund all of
the reinsurance premiums it received on that policy to the
Ceding Company, without interest.
This refund given by the Reinsurer will be in lieu of all
other reinsurance benefits payable on that policy under this
Agreement. If there is an adjustment to the policy benefits
due to a misrepresentation or misstatement of age or sex, a
corresponding adjustment will be made to the reinsurance
benefits.
f. UNEARNED REINSURANCE PREMIUMS.
Unearned reinsurance premiums will be returned on deaths,
surrenders and other terminations. This refund will be on a
prorated basis without interest from the date of termination
of the policy to the date through which a reinsurance premium
has been paid.
8. PREMIUM TAX REIMBURSEMENT.
The Reinsurer will not reimburse the Ceding Company for premium taxes.
9. DAC TAX AGREEMENT.
The Ceding Company and the Reinsurer hereby enter into an election
under Treasury Regulations Section 1.848-2(g) (8) whereby:
a. For each taxable year under this Agreement, the party with the
net positive consideration, as defined in the regulations
promulgated under Treasury Code Section 848, will capitalize
specified policy acquisition expenses with respect to
4
this Agreement without regard to general deductions limitation
of Section 848 (c) (1);
b. The Ceding Company and the Reinsurer agree to exchange
information pertaining to the net consideration under this
Agreement each year to ensure consistency or as otherwise
required by the Internal Revenue Service;
c. The Ceding Company will submit to the Reinsurer by May 1 of
each year its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding
Company stating that the Ceding Company will report such net
consideration in its tax return for the preceding calendar
year;
d. The Reinsurer may contest such calculation by providing an
alternative calculation to the Ceding Company in writing
within 30 days of the Reinsurer's receipt of the Ceding
Company's calculation. If the Reinsurer does not so notify the
Ceding Company, the Reinsurer will report the net
consideration as determined by the Ceding Company in the
Reinsurer's tax return for the previous calendar year;
e. If the Reinsurer contests the Ceding Company's calculation of
the net consideration, the parties will act in good faith to
reach an agreement as to the correct amount within 30 days of
the date the Reinsurer submits its alternative calculation. If
the Ceding Company and the Reinsurer reach agreement on the
net amount of consideration, each party will report such
amount in their respective tax returns for the previous
calendar year.
Both Ceding Company and Reinsurer represent and warrant that they are
subject to U.S. taxation under either Subchapter L of Chapter 1, or
Subpart F of Subchapter N of Chapter 1 of the Internal Revenue Code of
1986, as amended.
10. REPORTS.
The administering party is the Ceding Company. The reporting period is
monthly. For each reporting period, the Ceding Company will submit a
statement to the Reinsurer with information that is substantially
similar to the information displayed in Schedule C. The statement will
include information on the risks reinsured with the Reinsurer, premiums
owed, policy exhibit activity, and an accounting summary. Within 1
month after the end of each calendar quarter, the Ceding Company will
submit a reserve credit summary similar to that shown in Schedule C.
RESERVES FOR REINSURANCE.
The Reinsurer shall hold reinsurance reserves in accordance with all
applicable laws and regulations that the Reinsurer deems controlling.
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12. DEATH AND DISABILITY CLAIMS.
a. NOTICE OF DEATH.
The Ceding Company will notify the Reinsurer, as soon as
reasonably possible, after it receives notice of a death claim
(or disability waiver of premium or monthly disability benefit
claim) arising from a death (or disability) of an insured
under a policy reinsured.
b. PROOFS.
The Ceding Company will promptly provide the Reinsurer with
proper death (or disability) claim proofs (including, for
example, proofs required under the policy), all relevant
information respecting the existence and validity of the death
claim (or disability), and an itemized statement of the death
(or disability) claim benefits paid by the Ceding Company
under the policy.
c. CLAIMS PAYABLE.
Claims are payable only as a result of the actual death (or,
for waiver of premium or monthly disability benefits, due to
the disability) of an insured, to the extent reinsured under
this Agreement and for which there is contractual liability
for the claim under the issuing company's in force policy.
Except for accelerated death benefits for terminally ill
insured individuals (certified by a physician as having an
illness or physical condition that can reasonably be expected
to result in death in 24 months or less after the date of
certification), for which benefits are contractually provided
under the issuing company's policy, and which are reinsured
hereunder, no acceleration nor estimation of death claims on
living individuals is permitted, will not be due, owing or
payable, nor form the basis of any claim against the Reinsurer
whatsoever.
d. AMOUNT AND PAYMENT OF CLAIMS.
After the Reinsurer receives proper death (or disability)
claim notice, proofs of the claim, and proof of payment of the
claim by the Ceding Company, the Reinsurer will promptly pay
the reinsurance benefits due and owing to the Ceding Company
in one lump sum (or the Reinsurer will pay the Ceding Company
its proportionate share of the waived premiums or monthly
disability benefits on an annual basis). The Ceding Company's
contractual liability for death (and disability) claims is
binding on the Reinsurer. The maximum death benefit payable to
the Ceding Company under each reinsured policy is the net
amount at risk specifically reinsured hereunder; except that
if the Ceding Company pays interest on a claim, the Reinsurer
will pay the interest on the death benefit. Such interest will
be computed at the same rate and for the same period as that
paid by the Ceding Company. The Reinsurer will not be nor
become liable for any amounts or reserves to be held by the
Ceding Company on policies reinsured under this Agreement. The
total reinsurance in all companies on a policy shall not
exceed the Ceding Company's total contractual liability on the
policy, less its amount retained on the policy. The excess, if
any, of the total reinsurance in all companies plus the Ceding
Company's retained amount on the policy over its contractual
liability under the
6
reinsured policy will first be applied to reduce all
reinsurance on the policy. This reduction in reinsurance will
be shared among all the reinsurers in proportion to their
respective amounts of reinsurance prior to the reduction.
e. CONTESTED CLAIMS.
1) The Ceding Company will notify the Reinsurer of its
intention to contest, compromise, or litigate a claim
involving a reinsured policy. If the Ceding Company's
contest, compromise, or litigation results in a
reduction in its liability, the Reinsurer will share
in the reduction in the proportion that the
Reinsurer's net liability bears to the sum of the net
liability of all reinsurers on the insured's date of
death (or disability).
2) If the Reinsurer should decline to participate in the
contest, compromise or litigation, the Reinsurer will
then release all of its liability by promptly paying
the Ceding Company its full share of reinsurance
benefits for the policy and not sharing in any
subsequent reduction in liability.
f. CLAIM EXPENSES.
The Reinsurer will pay its share of reasonable investigation
and legal expenses connected with the litigation or settlement
of contractual liability claims unless the Reinsurer has
released its liability, in which case the Reinsurer will not
participate in any expenses after the date of release.
However, claim expenses do not include routine claim and
administration expenses, including the Ceding Company's home
office expenses. Also, expenses incurred in connection with a
dispute or contest arising out of conflicting claims of
entitlement to policy proceeds or benefits that the Ceding
Company admits are payable are not a claim expense under this
Agreement.
g. EXTRACONTRACTUAL DAMAGES.
The Reinsurer will not participate in and shall not be liable
to pay the Ceding Company or others for extracontractual
damages that are awarded against the Ceding Company as a
result of an act, omission or course of conduct committed by
the Ceding Company in connection with policies reinsured under
this agreement, except that the parties to this agreement
recognize that circumstances may arise in which equity would
require the Reinsurer, to the extent permitted by law, to
share proportionately in certain assessed damages. Such
circumstances are difficult to define in advance, but
generally would be those situations in which the Reinsurer was
an active party and directed, consented to, or ratified the
act, omission or course of conduct of the Ceding Company which
ultimately results in the assessment of extracontractual
damages. In such situations, the Ceding Company and the
Reinsurer will share the liability for such damages in
equitable proportions.
Extracontractual damages are any damages awarded against the
Ceding Company, including, for example, those resulting from
negligence, reckless or intentional conduct, fraud,
oppression, or bad faith committed by the Ceding
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Company in connection with the mortality risk insurance
reinsured under this Agreement.
Extracontractual damages shall include, by way of example and
not limitation:
i. Actual and consequential damages;
ii. Damages for emotional distress or oppression;
iii. Punitive, exemplary or compensatory damages;
iv. Amounts in excess of the risk reinsured hereunder
that the Ceding Company pays to settle a dispute or
claim;
v. Third-party attorney fees, costs and expenses.
The Reinsurer will pay its share of statutory penalties
awarded against the Ceding Company in connection with policies
reinsured under this agreement.
POLICY CHANGES.
a. NOTICE.
If a reinsured policy is changed, a corresponding change will
be made in the reinsurance coverage for that policy. The
Ceding Company will notify the Reinsurer of the change in the
Ceding Company's next accounting statement.
b. INCREASES.
If life insurance on a reinsured policy is increased and the
increase is subject to new underwriting evidence, then the
increase of life insurance on the reinsured policy will be
administered the same as the issuance of a new policy.
Reinsurance rates will be based on the original issue age,
duration since issuance of the original policy and the
original underwriting classification. Other increases not
subject to new underwriting evidence are not allowed under
this Agreement.
c. REDUCTIONS OR TERMINATIONS.
If life insurance on a reinsured policy is reduced, then
reinsurance will be reduced proportionately so that the
portion reinsured, remains the same. If life insurance on a
reinsured policy is terminated, then reinsurance will cease on
the date of such termination.
Reductions and terminations are permitted only when the
underlying policyholder directs such a reduction or
termination of the issuing company policy that is in force at
the time that the reductions and terminations take place.
d. RISK CLASSIFICATION CHANGES.
If a policyholder requests a Table Rating reduction or removal
of a Flat Extra, such change will be underwritten according to
the Ceding Company's Underwriting Guidelines. Risk
classification changes on facultative policies will be subject
to the Reinsurer's approval.
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e. NON-FORFEITURE BENEFITS.
1) EXTENDED TERM.
If the original policy lapses and extended term insurance is
elected under the terms of the policy, the Ceding Company will
notify the Reinsurer of the new amount of reinsurance. The
reinsurance rates will remain the same as the rates used for
the original policy and will be based on the original issue
age, duration since issuance of the original policy and the
original underwriting classification.
2) REDUCED PAID UP.
If the original policy lapses and reduced paid up insurance is
elected under the terms of the policy, the amount reinsured
will be reduced. and the Ceding Company will notify the
Reinsurer of the new amount of reinsurance. If reinsurance is
on an excess basis, reinsurance will be reduced by the full
amount of the reduction. If the amount of the reduction
exceeds the risk amount reinsured, the reinsurance on the
policy will be terminated. If reinsurance is on a first dollar
quota share basis, the amount reinsured and the amount
retained by the Ceding Company will be reduced based upon
their respective quota share percentages. The reinsurance
rates will remain the same as the rates used for the original
policy and will be based on the original issue age, duration
since issuance of the original policy and the original
underwriting classification.
14. TERM CONVERSIONS, EXCHANGES AND REPLACEMENTS.
a. NOTICE.
If a policy reinsured under this Agreement is converted,
exchanged or replaced, as defined below in 14.b, the Ceding
Company will notify the Reinsurer of the change in the Ceding
Company's next accounting statement. Unless mutually agreed
otherwise in writing, policies that are not reinsured with the
Reinsurer and that convert, exchange or replace to a plan
covered under this Agreement will not be reinsured hereunder
unless they are fully underwritten, have new suicide and
contestable periods, and are not reinsured under a different
Agreement or with a different Reinsurer.
b. EXCHANGES AND REPLACEMENTS.
For purposes of this Agreement, an exchange or replacement is
a new policy replacing an existing policy of the same type,
where the new policy lacks at least one of the following
characteristics: new business underwriting, new suicide
period, or new contestable period. New policies resulting from
exchanges or replacements in the insurance reinsured hereunder
will continue to be ceded to the Reinsurer under this
Agreement, in an amount not to exceed the original amount
reinsured hereunder.
Reinsurance rates for exchanges or replacements will be those
in effect at issuance of the original policy and will be point
in scale (based on the original issue age, duration, and
original underwriting class since issuance of the original
policy). The recapture period applicable to the original
policy
9
shall govern the new policy and duration shall be measured
from the effective date of the original policy.
If an exchange or replacement results in an increase in risk
amount, the increase will be underwritten by the Ceding
Company as new business and will be eligible for reinsurance
coverage under this Agreement as new business.
When an exchange or replacement is fully underwritten with new
suicide and contestable periods, the resulting policy will be
administered the same as the issuance of a new policy with the
Ceding Company paying first year premiums to the Reinsurer.
15. POLICYHOLDER REINSTATEMENTS.
a. REINSTATEMENT.
If the Ceding Company has been requested to reinstate a policy
that was originally ceded to the Reinsurer as facultative
reinsurance, the Ceding Company will resubmit the case to the
Reinsurer for underwriting approval before the reinsurance can
be reinstated.
b. PREMIUM ADJUSTMENT.
The reinsurance premiums for the interval during which the
policy was lapsed will be paid to the Reinsurer on the same
basis as the Ceding Company charged its policyholder for the
reinstatement.
c. REINSTATEMENT FOLLOWING REINSURANCE OF NON-FORFEITURE
BENEFITS.
If the Ceding Company has been requested to reinstate a policy
that was reinsured while on extended term or reduced paid-up
then the reinsurance for the extended term or reduced paid up
option will terminate and the original policy will be
reinstated using the reinstatement procedures set forth above,
in accordance with the reinsurance method used for the
original policy. If the reinstatement results in an increase
in the Reinsured Net Amount at Risk greater than that attained
at the time of the non-forfeiture activity, the terms of
Article 13b [Increases] will govern the increase.
16. INCREASE IN MAXIMUM DOLLAR RETENTION LIMITS AND RECAPTURE.
a. NEW BUSINESS.
If the Ceding Company increases its Maximum Dollar Retention
Limits listed in Section 2 of Schedule A, then it may, at its
option and with 90 days' written notice to the Reinsurer,
increase its Maximum Dollar Retention Limits shown in Section
2 of Schedule A for policies issued after the effective date
of the Maximum Dollar Retention Limit increase.
A change to the Ceding Company's Maximum Dollar Retention
Limits will not affect the reinsured policies in force except
as specifically provided in paragraph 16b, below.
10
b. RECAPTURE.
If the Ceding Company increases its Maximum Dollar Retention
Limits listed in Section 2 of Schedule A, then it may, with 90
days' written notice to the Reinsurer, reduce or recapture the
reinsurance in force subject to the following requirements:
i. An in-force cession is not eligible for recapture
until it has been reinsured for the minimum number of
years shown in Section 4 of Schedule A. The effective
date of the reduction in reinsurance will be the
later of the first policy anniversary following the
expiration of the 90-day notice period to recapture
and the policy anniversary date when the required
minimum number of years is attained.
ii. On all policies eligible for recapture, reinsurance
will be reduced by the amount necessary to increase
the total insurance retained up to the new Maximum
Dollar Retention Limits.
iii. If more than one policy per life is eligible for
recapture, then any recapture must be effected
beginning with the policy with the earliest issue
date and continuing in chronological order according
to the remaining policies' issue dates.
iv. The Ceding Company may not rescind its election to
recapture for policies becoming eligible at future
anniversaries.
v. Recapture of reinsurance will not be allowed on any
policy for which the Ceding Company did not keep its
Maximum Dollar Retention Limit at issue. The Ceding
Company's Maximum Dollar Retention Limits are stated
in Section 2 of Schedule A.
vi. If any policy eligible for recapture is also eligible
for recapture from other reinsurers, the reduction in
the Reinsurer's reinsurance on that policy will be in
proportion to the total amount of reinsurance on the
life with all reinsurers.
vii. Recapture will not be made on a basis that may result
in any anti-selection against the Reinsurer. The
Reinsurer maintains the discretion to determine when
anti-selection has occurred.
viii. Upon the effective date of recapture and again six
months following the recapture, the Reinsurer will
calculate a terminal accounting that will include a
refund of unearned premiums and unpaid claims.
17. ERROR AND OMISSION.
Any unintentional or accidental failure of the Ceding Company or the
Reinsurer to comply with the terms of this Agreement which can be shown
to be the result of an oversight, misunderstanding or clerical error,
will not be deemed a breach of this Agreement. Upon discovery, the
error will be corrected so that both parties are restored to
11
the position they would have occupied had the oversight,
misunderstanding or clerical error not occurred. Should it not be
possible to restore both parties to such a position, the Ceding Company
and the Reinsurer shall negotiate in good faith to equitably apportion
any resulting liabilities and expenses.
This provision applies only to oversights, misunderstandings or
clerical errors relating to the administration of reinsurance covered
by this Agreement. This provision does not apply to the administration
of the insurance provided by the Ceding Company to its insured or any
other errors or omissions committed by the Ceding Company with regard
to the policy reinsured hereunder.
18. INSOLVENCY.
In the event that the Ceding Company is deemed insolvent, all
reinsurance death or disability claims payable hereunder will be
payable by the Reinsurer directly to the Ceding Company, its
liquidator, receiver or statutory successor, without diminution because
of the insolvency of the Ceding Company. It is understood, however,
that in the event of such insolvency, the liquidator, receiver or
statutory successor of the Ceding Company will give written notice to
the Reinsurer of the pendency of a death or disability claim against
the Ceding Company on a risk reinsured hereunder within a reasonable
time after such death or disability claim is filed in the insolvency
proceeding. Such notice will indicate the policy reinsured and whether
the death or disability claim could involve a possible liability on the
part of the Reinsurer. During the pendency of such claim, the Reinsurer
may investigate such death or disability claim and interpose, at its
own expense, in the proceeding where such death claim is to be
adjudicated, any defense or defenses it may deem available to the
Ceding Company, its liquidator, receiver or statutory successor. It is
further understood that the expense thus incurred by the Reinsurer will
be chargeable, subject to court approval, against the Ceding Company as
part of the expense of liquidation to the extent of a proportionate
share of the benefit that may accrue to the Ceding Company solely as a
result of the defense undertaken by the Reinsurer. Where two or more
reinsurers are participating in the same death or disability claim and
a majority in interest (determined with respect to shares of net amount
at risk) elects to interpose a defense or defenses to any such death or
disability claim, the expense will be apportioned among the reinsurers
in the same proportion that the reinsurer's net liability bears to the
sum of the net liability of all reinsurers on the insured's date of
death or disability.
19. ARBITRATION.
a. GENERAL.
Notwithstanding any other provision, all disputes and other
matters in question between the parties, arising out of, or
relating to this Agreement, shall be submitted exclusively to
arbitration upon the written request of either party; except a
party shall not be prevented from filing and prosecuting a
suit in a court of competent jurisdiction solely for the
purpose of obtaining equitable relief, including for example,
but not limited to, injunction or enforcement of subpoenas.
The disputes and matters subject to arbitration include, but
are not limited to disputes upon or after termination of this
Agreement, and issues respecting the existence, scope, and
validity of this Agreement. The arbitrators
12
are to seek efficiencies in time and expense. The arbitrators
are not bound to comply strictly with the rules of evidence.
The arbitration panel also has, for example, the authority to
issue subpoenas to third parties compelling prehearing
depositions, and for document production. The arbitrators will
have the authority to interpret this Agreement and, in doing
so, will consider the customs and practices of the life
insurance and life reinsurance industries. The arbitrators
will consider this Agreement an honorable engagement rather
than merely a legal obligation, and they are relieved of all
judicial formalities and may abstain from following the strict
rules of law.
b. NOTICE.
To initiate arbitration, one of the parties will notify the
other, in writing, of its desire to arbitrate. The notice will
state the nature of the dispute and the desired remedies. The
party to which the notice is sent will respond to the
notification in writing within 10 days of receipt of the
notice. At that time, the responding party will state any
additional dispute it may have regarding the subject of
arbitration.
c. PROCEDURE.
Arbitration will be heard before a panel of three arbitrators.
The arbitrators will be current or former executive officers
of life insurance or life reinsurance companies other than
either party or an affiliate of either party. Each party will
appoint one arbitrator. Notice of the appointment of these
arbitrators will be given by each party to the other party
within 30 days of the date of mailing of the notification
initiating the arbitration. These two arbitrators will, as
soon as possible, but no longer than 45 days after the day of
the mailing of the notification initiating the arbitration,
then select the third arbitrator. In the event that either
party should fail to choose an arbitrator within 30 days after
the other party has given notice of its arbitrator
appointment, the party which has already appointed an
arbitrator may choose an additional arbitrator, and the two
shall, in turn, choose a third arbitrator before entering
arbitration. If the two arbitrators are unable to agree upon
the selection of a third arbitrator within 30 days following
their appointment, each arbitrator shall nominate three
candidates within 10 days thereafter, two of whom the other
shall decline and the decision shall be made by drawing lots.
Once chosen, the three arbitrators will have the authority to
decide all substantive and procedural issues by a majority
vote. The arbitrators shall operate in a fair but cost
efficient manner. For example, the arbitrators are not bound
by technical rules of evidence and may limit the use of
depositions and discovery. The arbitration hearing will be
held on the date fixed by the arbitrators at a location agreed
upon by the parties. The arbitrators will issue a written
decision from which there will be no appeal. Either party may
reduce this decision to a judgment before any court that has
jurisdiction of the subject of the arbitration.
Each party will pay the fees of its own attorneys, the
arbitrator appointed by that party, and all other expenses
connected with the presentation of its own case. The two
parties will share equally in the cost of the third
arbitrator.
13
The arbitration panel may, in its discretion, award attorneys'
fees, costs, expert witness fees, expenses and interest, all
as it deems appropriate to the prevailing party.
20. OFFSET.
All amounts due or otherwise accrued to any of the parties hereto or
any of their parents, affiliates, or subsidiaries, whether by reason of
premiums, losses, expenses, or otherwise, under this agreement or any
other contract heretofore or hereafter entered into, will at all times
be fully subject to the right of offset and only the net balance will
be due and payable. The right of offset will not be affected or
diminished because of the insolvency of either party.
21. GOOD FAITH; FINANCIAL SOLVENCY.
This Agreement is entered into in reliance on the utmost good faith of
the parties including, for example, their warranties, representations
and disclosures. It requires the continuing utmost good faith of the
parties, their representatives, successors, and assigns. This includes
a duty of full and fair disclosure of all information respecting the
formation and continuation of this contract and the business reinsured
hereunder. Each party represents and warrants to the other party that
it is solvent on a statutory basis in all states in which it does
business or is licensed. Each party agrees to promptly notify the other
if it is subsequently financially impaired.
In addition, the Ceding Company affirms that it has disclosed and will
continue to disclose to the Reinsurer all matters material to this
Agreement, such as its underwriting and policy issues (rules,
philosophies, practices, and management personnel), its financial
condition, studies and reports on the business reinsured, and any
change in its ownership or control. The Reinsurer or its
representatives have the right at any reasonable time to inspect the
Ceding Company's records relating to this Agreement.
22. TREATMENT OF CONFIDENTIAL INFORMATION.
The Reinsurer acknowledges that the Ceding Company has an obligation to
maintain the security and confidentiality of information about its
customers and their transactions. The Reinsurer agrees to comply with
those data security policies and procedures that the Ceding Company
determines are necessary for the safeguarding of Farmers customer
information. The Reinsurer understands that noncompliance with or
violations of these policies and procedures may result in termination
of the Agreement.
In performing its responsibilities, the Reinsurer will receive Customer
information from the Ceding Company. "Customer Information" includes
any/all information related to a customer or that can be identified
with respect to a customer, including the fact that an individual is a
customer of the Ceding Company.
The Reinsurer agrees that it will use Customer Information only for the
sole purpose for which such information was provided or obtained or for
other purposes permitted under the Xxxxx-Xxxxx-Xxxxxx Act as
implemented by regulation. The Reinsurer also agrees that it will not
disclose Customer Information to any party; provided, however, that the
Reinsurer may disclose Customer Information to a party as necessary to
fulfill its
14
obligations under this Agreement if (1) The Reinsurer will make its
best efforts to obtain agreements from any such third party that
require the third party to abide by the terms of this Confidentiality
provision, and (2) Reinsurer provides prior notice to the Ceding
Company before disclosing Customer Information to any third party other
than its retrocessionaires and affiliates.
Customer Information shall not include information which: (a) is or
becomes available to the general public through no fault of the party
receiving the Customer Information (the "Recipient"); (b) is
independently developed by the Recipient; (c) is rightfully received by
the Recipient from a third party without a duty of confidentiality; or
(d) is required to be disclosed by court order or operation of law.
Before disclosing any Customer Information under a court order or
operation of law, the Recipient shall provide the party disclosing the
Customer Information reasonable notice.
23. TERM OF THIS AGREEMENT AND TERMINATION.
The Ceding Company will maintain and continue the reinsurance provided
in this Agreement as long as the policy to which it relates is in force
or has not been fully recaptured. This Agreement may be terminated,
without cause, for the acceptance of new reinsurance after 90 days'
written notice of termination by either party to the other. The
Reinsurer will continue to accept reinsurance during this 90-day
period. The Reinsurer's acceptance will be subject to both the terms of
this Agreement and the Ceding Company's payment of applicable
reinsurance premiums. In addition, this Agreement may be terminated
immediately for the acceptance of new reinsurance by either party if
one of the parties materially breaches this Agreement, or becomes
insolvent or financially impaired.
24. MEDICAL INFORMATION BUREAU.
The Reinsurer is required to strictly adhere to the Medical Information
Bureau Rules, and the Ceding Company agrees to abide by these Rules, as
amended from time to time. The Ceding Company will not submit a
preliminary notice, application for reinsurance, or reinsurance cession
to the Reinsurer unless the Ceding Company has an authentic, signed
preliminary or regular application for insurance in its home office and
the current required Medical Information Bureau authorization.
25. SEVERABILITY.
In the event that any court, arbitrator, or administrative agency
determines any provision or term of this Agreement to be invalid,
illegal or unenforceable, all of the other terms and provisions of this
Agreement shall remain in full force and effect to the extent that
their continuance is practicable and consistent with the original
intent of the parties. However, in the event this Article is exercised
and the Agreement no longer reflects the original intent of the
parties, the parties agree to attempt to renegotiate this Agreement in
good faith to carry out its original intent.
26. SURVIVAL.
All provisions of this Agreement shall survive its termination to the
extent necessary to carry out the purposes of this Agreement or to
ascertain and enforce the parties' rights or obligations hereunder
existing at the time of termination.
15
27. NON-WAIVER.
No waiver by either party of any violation or default by the other
party in the performance of any promise, term or condition of this
Agreement shall be construed to be a waiver by such party of any other
or subsequent default in performance of the same or any other promise,
term or condition of this Agreement. No prior transactions or dealings
between the parties shall be deemed to establish any custom or usage
waiving or modifying any provision hereof. The failure of either party
to enforce any part of this Agreement shall not constitute a waiver by
such party of its right to do so, nor shall it be deemed to be an act
of ratification or consent.
16
SCHEDULE A
COVERAGE AND LIMITS
1. PLANS REINSURED:
All Single Life plans and supplemental benefits issued by the Ceding
Company are eligible for facultative reinsurance coverage under this
Agreement with the exception of the term plans covered under the
Automatic and Facultative Coinsurance Agreement effective August 1,
2002 (0251-2966).
2. CEDING COMPANY'S MAXIMUM DOLLAR RETENTION LIMITS:
----------- ----------------- -------------------- -------------------
Issue Ages Plans Standard - Table F Over Table F
Flat Extras $0 - Flat Extras over
$15.00 $15.00
----------- ----------------- -------------------- -------------------
0-60 FFUL, FPUL, VUL $ 2,000,000* $ 250,000*
----------- ----------------- -------------------- -------------------
0-60 All Other Plans $ 1,500,000 $ 250,000
----------- ----------------- -------------------- -------------------
Over 60 All 250,000 250,000
----------- ----------------- -------------------- -------------------
Payor Benefits Amount Issued
Monthly Income Benefit Rider**
------------------------------
Ages 15-55 $500 Per Month
Waiver of Premium Disability
----------------------------
Ages 15-55 Same as Life
Accidental Death Benefit***
Issued at Standard, 1 1/2 and two (2)
Ages Times Standard rate for same limit
1-60 $150,000
*The maximum retention on any one (1) life, not including Accidental
Death Benefits for normal double indemnity coverage, shall not exceed
the Life retention shown above by age and rating.
**Standard issues only.
***Accidental Death Benefits for a normal double indemnity coverage
shall be retained in addition to the limits for Life shown above.
3. PREMIUM DUE:
Reinsurance premiums are due annually in advance, one month after the
policy's anniversary.
17
SCHEDULE A, CONTINUED
RECAPTURE PERIOD:
Recapture is only allowed in accordance with Article 16.b of this
Agreement. The minimum number of years for a cession to be reinsured
before it is eligible for recapture pursuant to Article 16.b. is 10
years.
5. NET AMOUNT AT RISK:
The net amount at risk on Universal Life policies and riders eligible
for reinsurance under this Agreement, is defined below:
Option B Base Policy: The Net Amount at Risk is the Death Benefit minus
the Account Value*, where the Death Benefit is the greater of the Face
Amount or the minimum amount required under Section 7702 of the IRC.
Option A Base Policy: The Net Amount at Risk is the Death Benefit minus
the Account Value*, where the Death Benefit is the greater of the Face
Amount plus Policy Value or the minimum amount required under Section
7702 of the IRC.
The net amount at risk on Non-Universal Life policies and riders
eligible for reinsurance under this Agreement is defined as the death
benefit amount less the policy's cash value*.
* not deducted for riders and supplemental benefits
18
SCHEDULE B
REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. LIFE REINSURANCE PREMIUMS:
a. Standard annual reinsurance premiums per $1000 reinsured are
the following percentages in all years of the 75/80 Select and
Ultimate ALB rates attached to this Schedule B:
For products with 4 underwriting classes:
-------------------------------------- ----------------------------------
Underwriting Classifications Percentages
-------------------------------------- ----------------------------------
Premier 38%
-------------------------------------- ----------------------------------
Preferred 45
-------------------------------------- ----------------------------------
Standard 47
-------------------------------------- ----------------------------------
Smoker 83
-------------------------------------- ----------------------------------
For products with 3 underwriting classes:
-------------------------------------- ----------------------------------
Underwriting Classifications Percentages
-------------------------------------- ----------------------------------
Preferred 45%
-------------------------------------- ----------------------------------
Standard 47
-------------------------------------- ----------------------------------
Smoker 83
-------------------------------------- ----------------------------------
For products with 2 underwriting classes:
-------------------------------------- ----------------------------------
Underwriting Classifications Percentages
-------------------------------------- ----------------------------------
Non Smoker 47%
-------------------------------------- ----------------------------------
Smoker 83
-------------------------------------- ----------------------------------
b. Table rated substandard reinsurance premiums are the
appropriate multiple of the standard reinsurance premiums (25%
per table).
c. Flat Extra reinsurance premiums are the following percentages
of such premiums charged the insured:
-------------------------------------- ----------------------------------
Permanent flat extra premiums (for more than 5 years duration)
-------------------------------------- ----------------------------------
First Year 25%
-------------------------------------- ----------------------------------
Renewal Years 90
-------------------------------------- ----------------------------------
-------------------------------------- ----------------------------------
Temporary flat extra premiums (for more than 5 years duration)
-------------------------------------- ----------------------------------
All Years 90%
-------------------------------------- ----------------------------------
19
SCHEDULE B, CONTINUED
SUPPLEMENTAL BENEFITS REINSURANCE PREMIUMS:
a. Disability Waiver of Premium Benefit and Monthly Income
Benefit Rider reinsurance premiums are the premiums charged
the insured for the reinsured portion of the policy, less the
following allowances:
-------------------------------------- -----------------------------------
Years Allowances
-------------------------------------- -----------------------------------
1 90%
-------------------------------------- -----------------------------------
2+ 10
-------------------------------------- -----------------------------------
b. Accidental Death Benefit reinsurance premiums are based on the
following rates for each $1,000 of reinsurance:
Underwriting Classes Rates
-------------------------------------- -------------------------------------
Standard First Year 25(cent)
Renewal Years 75
-------------------------------------- -------------------------------------
Substandard Appropriate multiples of the standard
reinsurance premiums
-------------------------------------- -------------------------------------
c. Additional Insured Rider reinsurance premiums are the same as
the base policy rates.
3. AGE BASIS:
Age Last Birthday
20
1975-80 BASIC SELECT AND ULTIMATE TABLE WITH COMPANY D'S HIGH ISSUE
AGE EXTENSION
MALE - AGE LAST BIRTHDAY
[TABLE OMITTED]
1975-80 BASIC SELECT AND ULTIMATE TABLE WITH COMPANY D'S HIGH ISSUE
AGE EXTENSION
FEMALE - AGE LAST BIRTHDAY
[TABLE OMITTED]
SCHEDULE C
REPORTING INFORMATION
INFORMATION ON RISKS REINSURED
1. Type of Transaction
2. Effective Date of Transaction
3. Automatic/Facultative Indicator
4. Policy Number
5. Full Name of Insured
6. Date of Birth
7. Sex
8. Smoker/Nonsmoker
9. Policy Plan Code
10. Insured's State of Residence
11. Issue Age
12. Issue Date
13. Duration from Original Policy Date
14. Face Amount Issued
15. Reinsured Amount (Initial Amount)
16. Reinsured Amount (Current Amount at Risk)
17. Change in Amount at Risk Since Last Report
18. Death Benefit Option (For Universal Life Type Plans)
19. ADB Amount (If Applicable)
20. Substandard Rating
21. Flat Extra Amount Per Thousand
22. Duration of Flat Extra
23. XX Xxxxx (Yes or No)
24. Previous Policies (Yes or No)
25. Premiums
23
SCHEDULE C, CONTINUED
SAMPLE
POLICY EXHIBIT SUMMARY
(LIFE REINSURANCE ONLY)
CEDING COMPANY: ______________________________________________________________
REINSURER: ______________________________________________________________
ACCOUNT NO: ______________________________________________________________
PREPARED BY: __________________________________ Phone:( )_____________
DATE PREPARED: ______________________________________________________________
TYPE OF REINSURANCE:
Yearly Renewable Term ____________________________________
Coinsurance ____________________________________
Modified Coinsurance ____________________________________
Other ____________________________________
VALUATION DATE: __________________________
NUMBER OF AMOUNT OF
POLICIES REINSURANCE
In Force Beginning
of Period ___ /___/___ __________________ __________________
B. New Paid Reinsurance Ceded __________________ __________________
C. Reinstatements __________________ __________________
D. Revivals __________________ __________________
E. Increases (Net) __________________ __________________
F. Conversion In __________________ __________________
G. Transfers In __________________ __________________
H. Total Increases (B - G) __________________ __________________
I. Deaths __________________ __________________
J. Maturities __________________ __________________
K. Cancellations __________________ __________________
L. Expiries __________________ __________________
M. Surrenders __________________ __________________
N. Lapses __________________ __________________
O. Recaptures __________________ __________________
P. Other Decreases (Net) __________________ __________________
Q. Reductions __________________ __________________
R. Conversions Out __________________ __________________
S. Transfers Out __________________ __________________
T. Total Decreases (I - S) __________________ __________________
U. Current In Force ___/___/___ __________________ __________________
(A + H - T)
24
SCHEDULE C, CONTINUED
SAMPLE
RESERVE CREDIT SUMMARY
CEDING COMPANY: ______________________________________________________________
REINSURER: ______________________________________________________________
ACCOUNT NO: ______________________________________________________________
PREPARED BY: __________________________________ Phone:( )_____________
DATE PREPARED: ______________________________________________________________
TYPE OF REINSURANCE:
Yearly Renewable Term ____________________________________
Coinsurance ____________________________________
Modified Coinsurance ____________________________________
Other ____________________________________
VALUATION DATE: __________________________
TYPES OF RESERVES:
Statutory ____________________________________
GAAP ____________________________________
Tax ____________________________________
ISSUE
VALUATION BASIS YEAR IN FORCE IN FORCE RESERVE
MORTALITY INTEREST VALUATION RANGE COUNT AMOUNT CREDIT
A. Life
Insurance _______________ _______________ _______________ ______________ ______________ ______________ ______________
_______________ _______________ _______________ ______________ ______________ ______________ ______________
B. Accidental
Death Benefit _______________ _______________ _______________ ______________ ______________ ______________ ______________
C. Disability
Active Lives _______________ _______________ _______________ ______________ ______________ ______________ ______________
D. Disability
Disabled Lives _______________ _______________ _______________ ______________ ______________ ______________ ______________
E. Other
Please Explain _______________ _______________ _______________ ______________ ______________ ______________ ______________
GRAND TOTAL: _______________
25
SCHEDULE C, CONTINUED
SAMPLE
ACCOUNTING SUMMARY
CEDING COMPANY: ______________________________________________________________
REINSURER: ______________________________________________________________
ACCOUNT NO: ______________________________________________________________
PREPARED BY: __________________________________ Phone:( )_____________
DATE PREPARED: ______________________________________________________________
TYPE OF REINSURANCE:
Yearly Renewable Term ____________________________________
Coinsurance ____________________________________
Modified Coinsurance ____________________________________
Other ____________________________________
VALUATION DATE: __________________________
LIFE WP AD TOTAL
Premiums
First Year _____________ _____________ _____________ _____________
Renewal _____________ _____________ _____________ _____________
Allowances
First Year _____________ _____________ _____________ _____________
Renewal _____________ _____________ _____________ _____________
Adjustments
First Year _____________ _____________ _____________ _____________
Renewal _____________ _____________ _____________ _____________
Net Due REINSURER
First Year _____________ _____________ _____________ _____________
Renewal _____________ _____________ _____________ _____________
TOTAL DUE _____________ _____________ _____________ _____________
(The above information should be a summary of the detailed
information provided to the Reinsurer.)
26
[COMPANY LOGO]
SCHEDULE D
FACULTATIVE FORMS
(See attached sample forms.)
Application for Reinsurance
Notification for Reinsurance
27
[ADDRESS]
Telephone
Fax
APPLICATION FOR REINSURANCE
------------------------------------------------------------------------------------------------------------------------------------
[ ] [ ] Facultative: Please send approval [ ] Facultative Obligatory [ ] Automatic
------------------------------------------------------------------------------------------------------------------------------------
[ ] Joint Life [ ] YRT [ ] Other [ ] Self-Administered [ ] Age Last
------------------------------------------------------------------------------------------------------------------------------------
[ ] Single Life [ ] COINS [ ] MRT [ ] Individual Cession [ ] Age Nearest
------------------------------------------------------------------------------------------------------------------------------------
Last Name First Name M.I. Date of Birth Sex Age
------------------------------------------------------------------------------------------------------------------------------------
LIFE #1
------------------------------------------------------------------------------------------------------------------------------------
LIFE #2
------------------------------------------------------------------------------------------------------------------------------------
Smoker/Non State of Birth State of Res. Occupation SS#
------------------------------------------------------------------------------------------------------------------------------------
#1
------------------------------------------------------------------------------------------------------------------------------------
#2
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
ACCIDENTAL DEATH
LIFE #1 LIFE #2 Premium Waiver LIFE #1 LIFE #2 Plan Name*
Previous Ins. Inforce _______________ _______________ _______________ _______________ _______________ _______________
of which we retain _______________ _______________ _______________ _______________ _______________ _______________
Rating, if substandard _______________ _______________ _______________ _______________ _______________ _______________
Insurance now applied for _______________ _______________ _______________ _______________ _______________ _______________
or which we will retain _______________ _______________ _______________ _______________ _______________ _______________
Rating, if substandard _______________ _______________ _______________ _______________ _______________ _______________
Reinsurance requested _______________ _______________ _______________ _______________ _______________ _______________
*If this is a new plan, make sure you furnish us full plan details.
-----------------------------------------------------------------------------------------------------------------------------------
This cession represents: [ ] New Business [ ] Term Conversion [ ] Guaranteed Insurability Option [ ] Amended Cession
If Amendment: Reason _____________________________________________________ Effective Date _________________________________________
Original Policy No. ____________ Date of Original Policy _______________ Valuation Basis ________________________________________
PREMIUM WAIVER REINSURANCE ACCIDENTAL DEATH REINSURANCE
Rider Form No. ________________
Age Expiry ________________ Ricer Form No. ________________
Premium to be Waived ________________ Age Expiry ________________
Premium for Waiver Benefit ________________
--------------------------------------------------------------------------------
___________________________ ________________________________________ ____________________ ___________________
DATE AT CEDING COMPANY DATE BY
Other Comments: ________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Reinsurer:
[ ] Company A [ ] Company A International Limited
[ADDRESS] [ADDRESS]
This application is accepted and reinsurance is granted by the Reinsurer subject
to all the terms, conditions and limitations of the reinsurance treaty and this
application.
_____________ day of _________,20______ __________________________________
Authorized Signature
Reinsurance Agreement No. _______________________________________
[ADDRESS]
Telephone
Fax
NOTIFICATION OF REINSURANCE
------------------------------------------------------------------------------------------------------------------------------------
[ ] [ ] Facultative: Please send approval [ ] Facultative Obligatory [ ] Automatic
------------------------------------------------------------------------------------------------------------------------------------
[ ] Joint Life [ ] YRT [ ] Other [ ] Self-Administered [ ] Age Last
------------------------------------------------------------------------------------------------------------------------------------
[ ] Single Life [ ] COINS [ ] MRT [ ] Individual Cession [ ] Age Nearest
------------------------------------------------------------------------------------------------------------------------------------
Last Name First Name M.I. Date of Birth Sex Age
------------------------------------------------------------------------------------------------------------------------------------
LIFE #1
------------------------------------------------------------------------------------------------------------------------------------
LIFE #2
------------------------------------------------------------------------------------------------------------------------------------
Smoker/Non State of Birth State of Res. Occupation SS#
#1
------------------------------------------------------------------------------------------------------------------------------------
#2
------------------------------------------------------------------------------------------------------------------------------------
ACCIDENTAL DEATH
LIFE #1 LIFE #2 Premium Waiver LIFE #1 LIFE #2 Plan Name*
Previous Ins. Inforce _______________ _______________ _______________ _______________ _______________ _______________
of which we retain _______________ _______________ _______________ _______________ _______________ _______________
Rating, if substandard _______________ _______________ _______________ _______________ _______________ _______________
Insurance now applied for _______________ _______________ _______________ _______________ _______________ _______________
or which we will retain _______________ _______________ _______________ _______________ _______________ _______________
Rating, if substandard _______________ _______________ _______________ _______________ _______________ _______________
Reinsurance requested _______________ _______________ _______________ _______________ _______________ _______________
*If this is a new plan, make sure you furnish us full plan details.
-----------------------------------------------------------------------------------------------------------------------------------
This cession represents: [ ] New Business [ ] Term Conversion [ ] Guaranteed Insurability Option [ ] Amended Cession
If Amendment: Reason _____________________________________________________ Effective Date _________________________________________
Original Policy No. ____________ Date of Original Policy _______________ Valuation Basis ________________________________________
PREMIUM WAIVER REINSURANCE ACCIDENTAL DEATH REINSURANCE
Rider Form No. ________________
Age Expiry ________________ Ricer Form No. ________________
Premium to be Waived ________________ Age Expiry ________________
Premium for Waiver Benefit ________________
--------------------------------------------------------------------------------
___________________________ ________________________________________ ____________________ ___________________
DATE AT CEDING COMPANY DATE BY
Other Comments: ________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Reinsurer:
[ ] Company A [ ] Company A International Limited
[ADDRESS] [ADDRESS]
This application is accepted and reinsurance is granted by the Reinsurer subject
to all the terms, conditions and limitations of the reinsurance treaty and this
application.
_____________ day of _________,20______ __________________________________
Authorized Signature
Reinsurance Agreement No. _______________________________________
